Employee Benefits Compliance, Employer Mandate, Large Employers

Seasonal Employees: Who are they and why does it matter?

seasonal fruits

By Lisa Klinger, J.D., and Susan Grassli, J.D.

A “seasonal employee” is “an employee who is hired into a position for which the customary annual employment is six months or less.  The determination of which employees are seasonal employees has taken on new importance for “applicable large employers” (ALEs) because the Affordable Care Act (ACA) measurement method rules allow employers to treat full-time seasonal employees differently from full-time non-seasonal employees,  for  purposes of group health plan eligibility.  Misclassifying employees as seasonal employees may result in penalties for an ALE.

This article:

  • Explains the difference between a seasonal employee and a seasonal worker,
  • Provides examples of seasonal employees and ambiguous categories (such as summer interns),
  • Clarifies which Measurement Method to use for seasonal employees, and
  • Provides action items for ALEs


The rules governing seasonal employees and seasonal workers are in the February 2014 final regulations on the Employer Shared Responsibility (ESR) provisions of the ACA.  These rules are effective in 2015 for employers with 100 or more full-time employees and full-time equivalents, and in 2016 for employers with 50-99 full-time employees and full-time equivalents, if the employers qualify for the delayed effective date.

Seasonal “Employee” versus  Seasonal “Worker”

The final regulations provide separate definitions of “seasonal employee” (section 54.4980H-1(a)(38)) and “seasonal worker” (section 54.4980H-1(a)(39)).  The two definitions are different in substance as well in purpose.

Seasonal Employee

  • A seasonal employee is “an employee who is hired into a position for which the customary annual employment is six months or less.”  “Customary” means an employee who typically works each calendar year in approximately the same part of the year, such as summer or winter.
  • The definition of seasonal “employee” applies for purposes of determining whether a particular employee is full-time or not (See Step 4 of our “4 Steps to Compliance with the Employer Mandate” – request a copy from your Leavitt Advisor).

Seasonal Worker

  • A seasonal worker is one the employer employed for not more than four months (or 120 days) during the prior calendar year.
  • The definition of seasonal “worker” applies for purposes of calculating how many full-time employees and full-time equivalents an employer has, which determines whether the employer is an “applicable large employer” (ALE) and thus subject to the ESR rules.  (See Step 1 in our “4 Steps to Compliance with the Employer Mandate” – request a copy from your Leavitt Advisor)

This article focuses on seasonal “employees” and the ramifications for ALES.

Examples of Seasonal Employees

Following are three examples of employees who meet the definition of “seasonal employees”:

  • A municipality hires lifeguards each summer to work at the beach or the public pools, from May through August (4 months).
  • A ski resort hires ski instructors to work each year from October through March
    (6 months).
  • A farm hires “pickers” each year from July through November to pick vegetables and fruits (5 months).

If seasonal employment is extended in a particular year beyond its customary duration, the employee will not cease to be considered a seasonal employee.  The preamble gives the example of a ski instructor whose customary annual employment is six months or less but who in a particular year works seven months due to an unusually long or heavy snow season.

Examples of Non-Seasonal Employees

If an employer hires a category of employees and considers them to be “seasonal” employees and considers the season to be eight months, the employees are not seasonal employees for purposes of the ESR provisions.  Instead, they are regular full-time or part-time or variable hour employees, depending on their expected hours of service at date of hire.

Navigating ACA Compliance for Seasonal and Internship Positions

Two situations that arise fairly frequently and that are not entirely clear are:

  • An employer hires an employee to work the summer season, and also hires that same employee to work the winter season.
  • An employer hires students as full-time summer interns for three to four months, and might also hire some or all of the students part-time during the rest of the year.

Examples of the first situation might be a mountain/lake resort or recreation area that has summer sports and winter skiing, or a municipality that hires employees in the summer as parks and recreation employees and in the winter as snow plow drivers.  This situation is not addressed in the final regulations, but when IRS regulators were asked this question at the May 2014 American Bar Association Benefits and Tax meetings, they did not hesitate in responding that such an employee would not be considered a seasonal employee.  In pre-ACA regulations however, such employees would be considered “seasonal” employees if they are migrant farm workers who move with the seasons to follow the work that is available. Although not explicitly stated, this implies that employees who are not migrant workers would not be considered seasonal employees.

Student interns (not hired through the federal work study program) are not specifically addressed in the law or regulations, but two opposing arguments can be made.   One argument is that the “summer” intern does not meet the definition of “seasonal” employee because the intern could be hired at any time during the year to perform the same work.  The contra argument is that summer interns are seasonal employees (especially if the employer does not intend to hire them on a part-time basis after the summer) because the “summer internship” can only be performed during the summer while students are on break from school.  Employers who hire student interns full-time in the summer and part-time during the rest of the year might want to classify the two positions separately:  a full-time summer-only internship position, and a part-time internship position that can be performed anytime during the year.  Summer student interns who transition to part-time positions in the fall would have to be reclassified in the employer’s payroll system.  Employers who wish to take this position should obtain a legal opinion from their own attorney.

Even if an employer considers internship employees to be regular full-time employees, it might be able to exclude from eligibility all summer interns (even if they work full-time), because the Code section 4980H(a) penalty does not apply to large employers who offer coverage to at least 70% of full-time employees in 2015 (and 95% thereafter).  However, the 4980H(b) penalty would still apply if a full-time summer intern qualified for a subsidy to purchase insurance in the marketplace and was still employed full-time after three months.  Since this is unlikely if the student is hired only for three to four months in the summer, an employer probably would not be subject to any penalties. Additionally, it is likely that many summer interns will have coverage available through a parent’s group health plan, although this is not always the case.

Health Coverage Eligibility for Seasonal versus Non-Seasonal Employees

For a newly hired “seasonal employee” who is expected to work full-time (but only for the season), an employer can use the Look-back Measurement Method and track hours of service over the duration of the initial measurement period.  The likely result is the employee would not qualify as a full-time employee so would not need to be offered health coverage.  This is because an eligibility determination would not occur for 12 months, long after the seasonal employee is no longer employed.

On the other hand, for a non-seasonal employee who is reasonably expected at date of hire to work full-time, the employer must track hours monthly and offer health coverage by the first day of the fourth calendar month after date of hire.  (To avoid penalties under the separate –but-similar ACA “90-day waiting period” rules, most employers will likely offer coverage by the first day of the third calendar month after date of hire.) This would apply, for example, for the employee who is hired to work full-time but only for eight months of the year.  This employee would not meet the definition of “seasonal employee” under the regulations.

Consequences of Misclassifying Full-Time Employees as Seasonal

As noted initially, misclassifying employees as seasonal employees may result in penalties for an ALE.  Here’s a quick refresher on the potential penalties under Code section 4980H:

If at least one full-time employee buys health insurance in a public Exchange (Marketplace) and qualifies for a subsidy (either a premium tax credit or a cost-sharing reduction), the employer must pay a penalty.  There are two different types of penalties.

  • The Code section 4980H(a) penalty applies if a large employer offers coverage to less than 70% of its full-time employees in 2015 (or to less than 95% after the 2015 plan year).
  • The Code section 4980H(b) penalty applies if a large employer offers coverage to at least 70% of its full-time employees (95% after 2015), but for some full-time employees the coverage is either not “affordable” or does not provide minimum value.

Neither penalty applies if the employee who qualified for a subsidy was a variable hour or seasonal employee who was in his/her measurement or administrative periods, nor does it include those employees who are in their stability periods but who did not qualify for coverage based on their hours worked during the associated measurement period.

Thus, if an employer incorrectly classifies a new full-time employee as a seasonal employee and tracks the employee’s hours over a look-back measurement period (rather than tracking hours monthly and offering coverage by the fourth month of employment), the employer will be subject to penalties if the employee gets a subsidy to buy coverage in the Marketplace during that look-back measurement period.

Employer Action Items

    • Review and Update Employee Classifications: Employers should re-evaluate their current workforce classifications in light of the updated definitions and regulations.
    • Stay Informed on Penalty Structures: Familiarize yourself with the revised penalty structures to avoid potential fines.
    • Adapt to the New Look-back Measurement Method: Update internal systems and processes to align with the modified Look-back Measurement Method.
    • Assess Health Insurance Plans: Ensure that the health insurance plans offered to employees, including seasonal workers, comply with the expanded coverage guidelines.
    • Consult with Legal and HR Experts: Given the complexity of these changes, seeking advice from legal and human resources professionals is advisable to ensure full compliance.


  1. Is it possible to extend a 6 month seasonal to a 9 month seasonal due to need. I am managing a athletic complex that is close for most of the winter. It is owned by Salt Lake City Corp. and I understand why the parks department is bound to the 6 month due to year round operation. The part of the department that I will be managing will be closed from November through March every year. My question is, can I petition for the right to hire for 9 months?

    1. Lou,
      There is not a clear-but answer to your question, but my guess is that an EE who is hired for 9 months could not be considered a “seasonal” EE.
      You can hire a 6-month seasonal EE for an additional 3 months, but the EE probably would not be considered a “seasonal” EE for purposes of the ACA and determining full-time status and using the look-back measurement method. As I noted in the article, the Preamble to the Final Regs. does give the example of a ski instructor who usually works 6 months but in one year works 7 months due to unusually heavy snow season. However, I doubt the IRS would consider an EE hired for 9 months to be a seasonal EE. But maybe additional guidance (if it’s issued sometime) will address the boundaries of the “seasonal” EE definition.
      You should talk with your legal counsel on this issue. I think if you hire the EE as a seasonal EE in a 6-month position, you could track his/her hours over the course of the initial Measurement Period, for the first 6 months. Then, arguably, at the end of the 6th month, the EE has a change in employment status and is hired as a regular or temporary full-time EE. Note that under the ACA/ ER Mandate provisions, the categories of EEs are: Full-time, part-time, seasonal, and variable hour. There is no separate category for “temporary” EEs. So a full-time Temp would be treated as a full-=time EE, and a part-time temp would be treated as a part-time EE, and a variable hour temp would be treated as a variable hour EE. If the EE’s employment status changes during the Initial measurement Period from Seasonal to F-T temporary, and you are tracking the EE’s hours under the Look-back measurement method, then you need to offer coverage by the earlier of:
      1) the 1st day of the 4th month after the change in status, or
      2) the 1st day of the associated Stability Period fi the EE averaged at least 30 hours/week during the Initial measurement Period.

      Lisa Klinger, J.D.

  2. Lisa,

    An agricultural employer has a growing/picking season that consistently runs right up to the 6 month cutoff so it will be difficult to say that going over 6 months is not customary because it does happen. As a result, we are thinking about determining a select group of seasonal employees that would work more than 6 months each year that we would treat as FT from the beginning and just offer them coverage. The rest of the workers (hundreds of them) we would treat as seasonal and make sure they customarily stay under 6 months every year. Is it ok for us to bifurcate this or will that create problems for us? Would we have to create different duties for the longer group to make them different from the rest of the seasonal workers in order to safely categorize them differently? Thanks.

  3. Jeremy,
    Sorry for the late response. Yes, your approach is a good one, to treat specified EEs as FT, and then track hours of other VH and seasonal EEs.

  4. Good Afternoon,

    I’m so confused by this whole thing and my payroll company wants to charge an arm and a leg to do ACA reporting. I’m not sure we need it because of our seasonal employees.

    I work for a country club that hires seasonal employees May – October for golf. Several of these employees work 40 hours a week. Do I have to count them when I do my full time equivalent employees reporting?

    Thank you for your help!


  5. Can I hire an employee as seasonal, 6 months, who will be working 40 hours a week, and not offer health insurance?

  6. Kay & Leslie,
    If you hire a “seasonal employee” who is reasonably expected to work full-time but only for j6 months or less (a “season”), an employer can use the Look-back Measurement Method and track hours of service over the duration of the initial measurement period. Most employers use a 6-month or 12-month measurement period. The likely result is the employee would not qualify as a full-time employee so would not need to be offered health coverage. This is because an eligibility determination would not occur for 6 or 12 months, long after the seasonal employee is no longer employed.
    However, if the EE does work at least 780 hours during the initial 6 months, or 1,560 hours during the initial 12 months, then you would have to offer coverage IF the employee is still employed as of the first day of the associated Stability Period.

  7. I am an employee of a Church in Staten Island, NY and I run their Sports Program my hire date was 11/10/2010 in 2014 I started to also work in their Rectory, I resigned as Oct. 2016 from the Rectory only but am keeping the Sports Program position. I’ve been paid year round..Am I a seasonal Employee or Worker?

    They are now telling me since I am a seasonal employee/worker I am not eligible to be vested in the Archdiocese Pension Plan, which you are eligible after three years employment and 100 pct. vested as of 5 years.

  8. I can’t give you legal advice on that. I don’t know what rules apply to the Archdiocese Pension Plan. Since it is a church plan, it is not subject to ERISA unless it elects to be. The Seasonal employee/worker rules I reference in my article apply regarding employer group health plans b/c of the Affordable Care Act. Some of the Labor Code rules also may apply to church pension plans. I don’t have expertise in church pension plans, and the answer may depend on the terms of the particular plan also.

  9. Good morning Lisa,

    Can you please let me know if an employee that works normally 8-9 months during a year enrolls on the insurance offered by the Company, what happens when they are layoff for the Winter season (Dec-April)?. Do we have to cancel the insurance and then when hired back again in April, wait 90 days and offer the insurance again?.

    Thank you for your help.

    1. If the employee is enrolled in coverage and the coverage ends because the EE is terminated, you must offer COBRA (if you are subject to COBRA – i.e., you employ at least 20 employees). If you rehire the EE, you must look at your Re-hire policy and Break in Service rules. For example, if you use the “Rule of Parity,” if the EE worked for longer than the EE did not work, then upon return you must count the hours before and after the break to determine how many hours of service the EE had during the Measurement Period. This will affect the determination of whether the EE was Full-Time during the Measurement Period.

  10. If I have a seasonal employee that works 9 months a year, can I use 52 weeks to get his average weekly hours? If he worked 40 per week in the 9 months, it would only average 27.69 over 52 weeks.

    1. Yes, but under the facts you cite, you probably must offer coverage to a new-hire who meets these criteria, by the first day of the 4th month after date of hire. See the last two paragraphs of the article.
      •If a newly-hired employee is reasonably expected to work at least 30 hours per week (so would be considered full-time) and does NOT meet the definition of seasonal employee (e.g., an employee hired to work full-time for eight or nine months), you need to track their hours monthly and offer health coverage within three or four months of hire. This applies even if the employee will be tracked using the Look-back Measurement Method once he/she transitions from a new-hire to an “ongoing” employee.
      •If you hire a non-seasonal employee (e.g., an employee who is hired for 9 months) and you cannot reasonably determine at date of hire if they will be full-time, e.g. variable hours employees and part time employees, you can track their hours the same as you track hours of seasonal employees. (That is, you can track their hours over their “initial measurement period” and not offer benefits until the associated “stability period,” if the employee averaged at least 130 hours/ month during the measurement period.)

  11. I am not an employer, but I have a question. I am a Contract Worker for a company and I work outages at Nuclear Power Plants. I work from 25 to 60 days then draw unemployment in between. My company does offer Health Insurance. Here is the kicker… Say you go to work the first on January your coverage will start then, but if you get laid off before Feb 1st you lose it then, Now if you get laid off Feb 2nd you get to keep it until Feb 29th. then they send you cobra information which you cant afford, because now you are on unemployment. So I bought my own health insurance, because I didn’t want to pay the plenty, because I was only covered while working the job. So my question is should I get a discount on my health coverage being I am a contract worker?

    1. Tiffany, I’m sorry to say that the answer is no. Being a contract worker does not get you a discount on either your individual health insurance or on your group health insurance. Generally, employers offer group health coverage only to employees, not to independent contractors. And the only discounts on individual policies these days are those you buy through the Health Insurance Marketplace or Exchange, and only if you qualify for a subsidy.
      However, as you are probably aware, President Trump and the new Republican-controlled Congress intend to repeal and replace the Affordable Care Act (“Obamacare”). The bill that is currently proposed would essentially repeal the individual mandate (which is the requirement that you have health coverage or pay a tax penalty). It would not actually repeal it, but it would reduce the penalty for not having coverage to zero, and this would be retroactive to Jan. 1, 2016 (last year). This bill has NOT yet been enacted, and it is possible it will not be. So you might not want to drop your coverage immediately.
      Also in this proposed bill is a provision that would repeal the existing premium tax credits for lower-income insureds who buy individual health insurance policies. The bill would replace the subsidies it with a tax credit amount, which increases with age ($2,000 annually for people under age 30, increasing in $500 increments per 10-year age bands, to $4,000 annually for people age 60 and older). The new tax credit would phase out for single tax filers with income above $75,000 (or $150,000 if married filing jointly).